Swiss watchmaker Swatch Group reported Thursday that sluggish sales in China wiped out gains in other regions during the first half of 2025, cutting its net profit by 88 percent.

The company posted net sales of 3.1 billion Swiss francs ($3.8 billion), down 11.2 percent from the same period last year. Net profit dropped to 17 million francs.

"The decline in sales is exclusively attributable to China," the company said, noting that other regions matched or exceeded record sales levels set in 2023 and 2024.

Swatch, which owns luxury brands including Omega, Longines, and Tissot, said China’s share of its global sales has fallen from one-third to just under one-fourth due to a sluggish economy and a worsening real estate crisis that has impacted consumer spending.

Sales to Chinese wholesalers declined 30 percent in the first half, while sales in its retail stores were down 15 percent. The company also cited weak demand in Hong Kong, Macao, and Southeast Asia.

"As feared, another half-year with a lot of sand in the gears," said Patrik Schwendimann, an analyst at Zurich Kantonalbank, in a market note.

Despite the disappointing financial results, Swatch shares rose 0.8 percent to 138.25 francs in late morning trading. The broader Swiss Performance Index was up 0.7 percent.

Swatch said it has seen early signs of improvement in China and expects a better market environment in the second half of the year. Growth in other regions has remained strong, with double-digit increases in North America, India, Turkey, the Middle East, and Australia.

"The USA, Japan and India continue to have great growth potential," the company said, adding that it expects greater utilization of its production capacity in the second half due to new product launches.